Consider a regression study involving a dependent variable y, a quantitative independent variable xā, and a categorical independent variable xā with two levels (level 1 and level 2). (Use xā =
level 1 and x2 = 1 for level 2.)
(a) Write a multiple regression equation relating xā and the categorical variable to y.
y = βο+β1Ć1 + B2X2
Ī(y) = βο + β1Ć1
E(y) = βο + β1Ć1 + β2
E(y) = βο + β1Ć1 +
B2x2
(b) What is the expected value of y corresponding to level 1 of the categorical variable?
E(y | level 1) = 80 + β1x1
X
(c) What is the expected value of y corresponding to level 2 of the categorical variable?
Ely | level 2) = Bo+B1+B22
X